Focusing on bigger and better things

Lately I have found myself fixating too much on ST wiggles of the market, but it's hard not to especially given all that's going on. I've stated before many times that the shorter the time frame the more random the market is and if you fixate too much on the ST you risk missing out on bigger and better things. Big money is made riding big trends. I've been guilty at times of being too fixated on the very short term, i.e. like trying to capture the next 2-5% move in the market.  When I look back I find that it is better not to worry much about the ST direction of the market until there's historical extremes in sentiment indicators which imply significant risk to the market of 15%+ . 

Now being the hypocrite that I am, let me give my 2 cents about the ST action we've been seeing in the market. We have gone from ST oversold to overbought. This was due to a combination of stimulus hopes and bear traps i.e. when Trump got covid and then called off stimulus talks. Both those events ensnared and ripped off the nuts of the permabear trading community making them angrier and even more bitter than before. The recent spiky move in the 10 yr bond yield and the CDN dollar (which still stupidly continues to act as a ""risk on" currency) is what we also saw in June and at previous ST tops. AAII sentiment, NAAIM and fund flows as a whole have incrementally grown more bullish but are nowhere close to any historical extreme. Over the weekend there's news of resistance to Trump's revised stimulus offer. Will the market gap down on this? I don't know, nor should I really care on the grand scheme of things. I need to focus more on the bigger picture which is this:  based on the evidence I see, I  believe the market is in a primary uptrend and will continue to be in one until we get a lot more people "in the pool" and that's going to be reflected by historic bullish fund flows/positioning from retail and professional. That's going to reflected in the narrative changing from "we're still not out of the woods with the recovery" to something like "global synchronized growth is back!" which at that point the pandemic will have passed or largely passed. Until then, we have a wall of worry type environment. Granted, that doesn't mean we can't get nasty declines but they should be short lived ones. Remember, the market pre-prices all widely known expectations/fears and so if any do come to fruition, the market reaction is either short lived or it's ignored. Right now there is a widely held fear that Trump is going to contest the results of the election if he loses. There is also the expectation that Biden is going to win. The Covid 2nd wave is also old news. So, any kind of negative reaction to any of the above will be short lived or ignored unless people suddenly become too complacent about it. Maybe a little bit of  complacey is creeping in as of late...tough to say for sure. Even if that's the case, complacency will likely to turn to worry and fear very quickly if the market starts selling off from here, because the underlying deep rooted skepticism is still there in my opinion. 

When it comes to focusing on bigger and better things one area I'm really keen on is green related sectors.Companies that have a focus on renewable energy and energy efficiency appear to have a really bright future.  Climate change awareness/urgency appears to have accelerated to the point where major action has to take place in the next 10-20 years. I read an article today about how the EU has plans to upgrade more than 200 million buildings including changes in heating and insulation to improve energy efficiency at a cost of $300B Euros/yr  for the next 10 years. When it comes to renewables, the economics are now making much more sense which was not the case 10 years ago. The movement towards socially responsible investing is gathering steam by the day whereby it's gotten serious attention from big money managers not just as a growth opportunity; but also because they are being increasingly scrutinized by how socially responsible  the companies of their portfolio are. Many stocks that are focused in these above areas have been largely bucking the trend of the stock market in general as of late and I think that may be due to an expected Biden win who is promising big spending in these areas. A sell on the news reaction could be possible here or something worse if Trump wins. But those are ST concerns. The LT fundamentals of this space are solid. 

So while everyone fixates about the covid second wave or Trump's next tweet, I'm going to start focusing on bigger and better things.